How to Protect Your International Operations: A Guide to Rate Locking
When a company closes an international contract, the figure on paper seems clear: a determined amount of dollars, euros, or yen. But between the moment that agreement is signed and when the money actually crosses borders, there's an invisible space where value can evaporate or multiply without warning. This is the territory of currency volatility—that phenomenon that turns a seemingly simple transaction into an involuntary bet against global markets. While executives celebrate a 15% profit margin, the exchange rate may be silently cutting it to 8% before the payment reaches its destination.
The Hidden Challenge in International Payments
Currency volatility doesn't discriminate: it hits both the startup importing supplies and the multinational with operations across five continents. A supplier in Vietnam expects $50,000 for a shipment, but by the time the transfer processes three days later, a shift in rates can mean those dollars now buy 3% less in their local currency.
That 3% isn't a minor accounting adjustment; for many companies operating on tight margins, it represents the difference between profitability and loss. And here's the cruel detail: while large corporations have treasury teams and sophisticated financial products to hedge themselves, mid-sized and small companies face this risk practically defenseless.
The most challenging aspect of this problem is its unpredictable nature and cumulative effect. It's not just about dramatic movements during economic crises; everyday volatility—that 1-2% oscillation that seems insignificant—becomes a constant problem when you multiply it across dozens or hundreds of monthly transactions.
Companies find themselves trapped in a paralyzing dilemma: to protect against volatility, many choose to convert currency early and keep capital locked in different currencies, waiting for the moment to execute payments. But that frozen money represents liquidity they can't use to seize other business opportunities, grow their operation, or respond to urgent needs.
It's an invisible but real cost: every dollar or euro immobilized while waiting is a door that closes to another sale, another investment, another strategic move. In the end, companies dedicate disproportionate resources not to their core business, but to managing this uncertainty: calculating margins with increasingly wide buffers, losing competitiveness, or worse yet, rejecting international opportunities simply because currency risk and the cost of keeping capital blocked are too complex to manage.
The real cost isn't just what's lost in each transaction, but the doors that never open.
What is Rate Lock?
Rate Lock is a tool that allows you to secure a specific exchange rate for a set period (generally between 12 and 72 hours) before executing your operation.
Think of it like making a reservation: you lock the price today, but pay tomorrow.
How Does It Work in Practice?
- Lock the operation at your pace
When creating your international payment quote, you select Rate Lock, define the conditions (source currency, destination currency, and disbursement amount), and set the timeframe you need to deliver the funds with a maximum of 72 hours. - Review the agreed conditions
You visualize the timeframe you defined, the payment amount at destination, and the cost of the lock. - Execute when convenient
You transfer the funds within the timeframe you established, and your operation completes under the initially set conditions, regardless of market variations.
If the payment doesn't arrive before the time expires, the lock is cancelled and penalties apply.
When Does It Make Sense to Use This Tool?
This functionality is especially valuable when:
- You need internal approvals before you can send funds (board, treasury, management)
- You're waiting to receive payments before you can execute your conversion
- You want to secure a favorable rate but can't act immediately
- There's uncertainty in the timing of your payments
- You need to manage risk during weekends or holidays
If you have funds available and ready to send immediately, a standard operation will be more economical.
Real Use Cases
Currency volatility isn't an abstract problem that only lives in financial reports or CFO conversations. It's something that hits concrete operations every day: the importer who finds the perfect price but needs internal approval, the remittance company that promises speed but must wait for funds to arrive, the PSP that aggregates thousands of transactions before being able to consolidate.
In each of these scenarios, there's an inevitable time gap between the moment a price is committed and the moment the payment can actually be executed. And it's precisely in that space where volatility takes its toll.
Here are four situations where this challenge manifests in different ways, but where the solution points to the same principle: converting market uncertainty into operational certainty.
1. Protecting Profitability for Import/Export Companies
A Colombian importer closes a machinery purchase. The dollar-peso rate adjusts to the conditions they need to make the payment, but they need 48 hours for management to approve and the treasury team to release the funds. The supplier won't grant extensions.
The problem is that, with tight margins, they can't afford to bet that the dollar will stay still. If it rises 2% in those 48 hours, the profitable operation becomes a loss.
With Rate Lock, when closing the purchase, they lock the quote for 48 hours. They complete all internal approvals calmly, protect the profitability calculated from the start, and make the payment when the treasury team has everything ready.
This way, they convert exchange rate chaos into something predictable. They can work at their own pace without the market ruining their deal.
2. Predictable Processes for Payment Service Providers (PSPs)
PSPs operate with predefined settlement cycles (generally 2-3 days), aggregating transactions from hundreds of merchants before executing conversions. During this period, they accumulate obligations in multiple currencies while waiting for funds to consolidate.
Despite not controlling exactly when they'll receive the aggregated funds, they have contractual commitments with their merchants. Volatility during this cycle can turn profitable operations into losses.
By using Rate Lock, when closing the aggregation cycle, they lock quotes according to pending obligations, guaranteeing margins before receiving funds.
This converts international movements from a risk center into a predictable process. They can quote competitive rates with confidence and fulfill obligations without exposure to adverse market movements.
3. Making Fast Moves Without Affecting Margins for Remittance Companies
Remittance companies promise deliveries in hours or same-day, but funds arrive via bank transfer in 1-3 days. To keep speed promises, they must commit their own liquidity before receiving funds from the sender.
A remittance can turn into a loss if the exchange rate moves 2% before receiving funds. With thousands of small operations, each volatility point directly impacts profitability.
Upon receiving the customer's order and using Rate Lock, it's possible to lock the quote even before receiving funds, advance delivery to the beneficiary with total cost certainty, and protect margins on each transaction.
The benefit lies in guaranteeing margins on each operation and keeping speed and efficiency promises without assuming major currency risk.
4. Improving Corporate Client Experience for Conversion Desks (OTC)
When a corporate mining client needs to convert $2.5 million USD to Colombian pesos on a Wednesday to pay payroll on Friday, they must count on the fact that although the rate is favorable, the treasurer can't release funds until Thursday pending board approvals.
The traditional problem is that without protection, there are two bad options: wait and risk the local currency depreciating, or execute immediately using their own capital as a bridge.
With Rate Lock, you can offer the client to "lock" the favorable rate for 36 hours with a transparent additional charge. The client has cost certainty, the desk covers their position immediately eliminating risk, and when funds arrive on Thursday, the conversion executes under agreed conditions.
This way, you convert an operational friction point into an additional revenue source, improving client experience and reducing capital risk.
Is It for You?
Rate Lock transforms uncertainty into predictability. If your company handles international payments where timing is complex, margins are tight, or you need to protect profitability during approval processes, this tool can be the difference between profitable operations and avoidable losses.
The key question is simple: Is it worth having functionality that limits the risk of the market moving against you during your operational window?
For many companies operating internationally, the answer is a resounding yes.
Contact sales and learn more about our 24/7 Cross-Border Payment solutions.
Frequently Asked Questions
What is Rate Lock?
Rate Lock allows you to secure the quote for a payment you'll execute later, between 12 and 72 hours.
How do I know if my company really needs this?
Rate Lock is ideal if you need to approve payments with the board or treasury before executing, receive funds from clients days after committing a rate, aggregate multiple transactions before being able to consolidate, or lose opportunities because currency risk is too complex to manage. The key question is whether the time between committing a price and being able to execute the payment generates anxiety or losses for you. If the answer is yes, you need this tool.
How much does it cost and is it worth it?
Rate Lock has an additional cost over the standard operation. The exact cost is clearly shown before confirming so you can decide if it's worth it in your specific case. Think about this: if a two percent movement in the exchange rate can erase your profit margin in those 48 hours of waiting, the cost of the lock is a fraction of what you could lose without protection. If you have funds ready to send immediately, a normal operation will be more economical.
What happens if I can't send the payment on time?
If funds aren't transferred within the agreed timeframe, the quote is cancelled and penalties apply. That's why it's important to be realistic with your internal process timelines. The good news is that you define the timeframe you need, so you have total control over this aspect.
Do I need to have the money available to lock the rate?
You don't need to have funds in your account when locking, and this is precisely one of the most valuable benefits. You can secure the rate before receiving funds from your clients or before the treasury team releases the payment, as long as you have reasonable certainty you'll meet the transfer within the established timeframe. This is especially useful if you promise fast deliveries to your clients but funds arrive later, or if you operate with aggregation cycles where you consolidate first and pay later.
How do I start using Rate Lock?
The process is straightforward. Contact the sales team to understand how it integrates with your specific operations and what process you need to follow to get started.
